1031 Exchange Calculator (2026)- Estimate Taxes Deferred

If you’re selling a rental, commercial property, or other investment real estate and planning to buy a replacement property, the numbers can get confusing fast: adjusted basis, depreciation, realized gain, loan payoff vs new loan, and closing costs. This guide explains the math a calculator uses, how to use the calculator correctly, and what to watch out for.

What is a 1031 exchange (quick definition)

A 1031 exchange calculator (often called a “like-kind exchange”) is a strategy that can allow you to defer certain taxes when you sell qualifying investment or business real estate and reinvest into qualifying replacement real estate.

Key idea: you may be able to defer:

• capital gains tax on the sale, and
• depreciation recapture tax (to the extent the gain is deferred)

But the deferral can be reduced or eliminated if you receive boot (cash boot or mortgage boot) or fail to meet timing/structural rules.

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What a 1031 exchange calculator helps you estimate

A strong calculator typically estimates:

1) Adjusted basis

This is your “tax basis” after improvements and depreciation.

2) Net sale proceeds and realized gain

How much gain you created on paper when you sold.

3) Boot

Boot is the portion that can become taxable in an exchange (simplified). Common boot types:

• Cash boot: you didn’t reinvest all net proceeds
• Mortgage boot: your debt went down and wasn’t offset

4) Recognized gain (taxable gain)

A common simplified rule:

• Recognized gain ≈ min(realized gain, boot)

5) Estimated taxes without 1031 vs with 1031

A calculator may compare:

• taxes if you did a normal sale, versus
• taxes recognized if you did a partial exchange with boot

6) 45-day and 180-day deadlines

From the closing date of the relinquished property:

• 45 days to identify replacement property(ies)
• 180 days to close on replacement property(ies)

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Inputs you need (and why they matter)

Most calculators ask for these key numbers. Here’s what each does.

Original purchase price

This is your starting point for basis.

Capital improvements

Major improvements (not repairs) generally increase basis.

Accumulated depreciation

Depreciation reduces basis and often creates depreciation recapture exposure in a taxable sale.

Sale price and selling expenses

Your net sale proceeds depend on:

• contract sale price
• less commissions and closing costs

Loan payoff on the sold property

Debt affects your “net cash” from the sale and mortgage boot calculations.

Replacement property purchase price and new loan amount

To fully defer, many investors try to:

• reinvest sufficient value, and
• replace equal or greater debt (or add cash to offset)

Tax assumptions (optional)

Many calculators include:

• long-term capital gains rate
• depreciation recapture rate
• state tax rate
• optional NIIT (3.8%) toggle

These rates vary based on income, filing status, and state. Treat them as planning inputs.

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How to calculate a 1031 exchange tax savings calculator

The calculator’s goal is to estimate gain, boot, and potential taxes recognized. Below is a clear “calculator-style” path.

Step 1: Calculate adjusted basis

A common simplified structure:

Adjusted basis = Purchase price + Improvements − Accumulated depreciation

Example:

• Purchase price: $350,000
• Improvements: $50,000
• Depreciation: $80,000

Adjusted basis = 350,000 + 50,000 − 80,000 = $320,000

Step 2: Calculate net sale amount (amount realized)

Many calculators simplify the sale side to:

Net sale amount = Sale price − Selling costs

Example:

• Sale price: $600,000
• Selling costs: $36,000

Net sale amount = 600,000 − 36,000 = $564,000

Step 3: Calculate realized gain

Realized gain = Net sale amount − Adjusted basis

Example:

• 564,000 − 320,000 = $244,000 realized gain

If realized gain is ≤ 0, there may be no gain to defer (though other tax rules can still matter). A calculator will typically show “no gain detected” or similar.

Step 4: Estimate depreciation recapture vs capital gain portions

A simplified breakdown:

• Recapture portion ≈ min(depreciation, realized gain)
• Capital gain portion ≈ realized gain − recapture portion

Example:

• Depreciation = 80,000
• Realized gain = 244,000
  Recapture portion = min(80,000, 244,000) = $80,000
  Capital gain portion = 244,000 − 80,000 = $164,000

This split matters because depreciation recapture can be taxed differently than long-term capital gains.

Step 5: Estimate boot (cash boot and mortgage boot)

Boot is a complex topic in real exchanges, but many online calculators use a practical, simplified approach.

A) Cash boot (simplified)

First estimate “net cash proceeds” after paying off the old loan:

Net sale proceeds (cash) = Net sale amount − Old loan payoff

Then estimate how much cash you used to acquire the replacement property:

Net purchase cash required = (Replacement price + replacement closing costs) − New loan

If you have leftover cash from sale proceeds (i.e., you didn’t reinvest it), that can be cash boot:

Cash boot ≈ max(net sale proceeds − net purchase cash required, 0)

B) Mortgage boot (simplified)

Mortgage boot is commonly thought of as “debt reduction” not offset by adding cash.

A simplified approach:

• Debt reduction = max(old loan − new loan, 0)
• If you increased cash invested enough to offset that reduction, mortgage boot may be reduced.

A good calculator will show both:

• cash boot
• mortgage boot
• total boot

Step 6: Recognized gain (taxable gain estimate)

Common simplified rule for calculators:

Recognized gain ≈ min(realized gain, total boot)

• If boot is $0 and you met all other requirements, recognized gain may be near $0 (full deferral).
• If boot is positive, you may have partial deferral.

Step 7: Estimate taxes “no exchange” vs “exchange”

A calculator often compares:

Taxes with no 1031

• recapture portion × recapture rate
• capital gain portion × LTCG rate
• plus state tax and optional NIIT

Taxes with 1031 + boot

Taxes are applied to recognized gain (and the calculator may allocate recognized gain to recapture first, then cap gains).

The difference between these two is an estimate of “tax deferred.”

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How to use the 1031 exchange calculator (step-by-step)

Here’s the fastest workflow that produces realistic outputs.

1) Enter your relinquished (sold) property numbers

• purchase price
• improvements
• accumulated depreciation
• sale price and selling costs
• loan payoff

Tip: If you’re not sure about depreciation, check tax returns or ask your CPA. Depreciation is a major driver of basis and recapture.

2) Enter your replacement (new) property numbers

• purchase price
• estimated purchase closing costs
• new loan amount

Tip: Don’t ignore closing costs; depending on how costs are treated, they can affect cash invested and potential boot.

3) Enter your closing date (sale)

The calculator outputs:

• 45-day identification date
• 180-day completion date

These are planning anchors. Timing rules can interact with tax filing due dates—ask your qualified intermediary or CPA.

4) (Optional) Add tax assumptions

If you want a rough tax comparison:

• choose LTCG rate, recapture rate, state rate
• optionally include NIIT

Then run the calculation and review the “tax without exchange” vs “tax with boot” outputs.

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Tips to reduce boot risk (planning considerations)

These are general planning concepts; always confirm with professionals.

Tip 1: Reinvest enough value

Many investors aim to buy replacement property of equal or greater value than the relinquished sale (net of costs). Underbuying can increase boot risk.

Tip 2: Replace debt or add cash

If your old loan payoff is higher than your new loan, you may create mortgage boot unless you offset it with extra cash.

Tip 3: Don’t treat the calculator as a compliance checklist

A calculator estimates gain and boot, but it does not confirm:

• like-kind qualification
• proper title vesting
• use of a qualified intermediary
• correct identification rules
• exchange expense treatment
• multi-property or improvement exchanges

Use it for planning discussions, not final compliance.

Tip 4: Track the deadlines early

A 1031 can fail simply due to timing. Use the calculator’s date feature, then work backward to schedule:

• property tours
• inspections
• financing timeline
• identification letter drafting

Tip 5: Model multiple scenarios

Try these “what if” changes:

• higher replacement price
• higher/lower loan amount
• different selling costs
• different depreciation total

This turns the 1031 exchange calculator into a planning tool, not just a one-time number.

FAQ/Frequently Asked Questions

You can explore Similar Calculator like this Free IFTA calculator​ by State.